As far as I understand, perpetual contracts are like regular futures except they can be held open indefinitely. However, I don't know about any other brokers out there, but in Binance, when you open a perpetual contract, you do so by interacting with an order book, meaning, for every position you open there is an opposite position held by another person (your counterpart). Now this is when my understanding gets a bit fuzzy. Correct me if I'm wrong, but I believe the contract is an agreement to perform a transaction at a pre-defined price, somewhere in the future. So... what happens to my counterpart if I close my position, or get liquidated? I mean, if my position, (let's say, a long), gets closed, then who is going to be there to fulfill my counterparts' short position when he closes his? Does this issue happen with regular futures as well?


2 Answers 2


Yes, it also work like this for regular futures contracts.

Say you've an open long position in that contract. In order to close it (open a short position so as to get net zero exposure), you'll need someone to go long that same contract. Since the counterparty for all trades is the exchange (Central Counterparty or CCP), the final exposure for each party would be:

You: net zero (long position + short position)

Your first ctpy: one short position

Your second ctpy: one long position

CCP: net zero (two long positions + two short positions)

So your original long position doesn't disappear when you close it.


The only way you can close out your long is by selling it on the order book. When this happens, another investor takes the long. That person is now on the other side of the short position. This dynamic is the same as for regular futures.

  • $\begingroup$ And if you lose all your margin and get liquidated? $\endgroup$
    – J3STER
    Jul 12, 2022 at 20:40
  • 1
    $\begingroup$ If you get liquidated, the exchange sells the future to another investor on your behalf. Same result. $\endgroup$
    – dm63
    Jul 12, 2022 at 21:50

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